| Copyright 2005 All Rights Reserved Charles E. Marunde & FreeRealEstateLaw.com |
| Wealthy Partner Learns How to Lose Money |
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A very wealthy businessman, who made his fortune in a business
unrelated to real estate, decided to invest in a large residential project,
which would involve all of the engineering and legal work to get the land
approved for subdividing. When finished, the total number of lots would
have a listed FMV of about $9 million. There would be a healthy profit in
there for him when all was done.
His partners consisted of two other men, one who was a
developer/builder and the other a mortgage broker with experience in
real estate projects.
The problem was the developer/builder, who was appointed the
managing partner, and who was the only local partner, was dishonest,
and pocketed over $1 million dollars personally, before the other
partners woke up. It was at this point that the partners made a decision
to bring in an attorney, me.
As our investigation and lawsuit progressed, we learned that the
managing partner had purchased heavy duty equipment with partnership
funds and put title in his personal name. He kept no records. When I
supbpoened the accounting records, he produced a small box of receipts
from McDonalds. I'm not kidding.
His hot shot and expensive attorney, who was extremely arrogant and
self-righteous, claimed his client never did anything and that the other
partners were really at fault for a number of things that he was never
really able to articulate.
The litigation went on for months, and finally the project crashed,
because the temporary financing ended and the lenders foreclosed. The
wealthy partner was unwilling to pour any more money into the project to
save it.
The managing partner got away with over $1 million dollars. This was the
goal of the Seattle attorney representing the managing partner. Had the
wealthy partner put more money into the legal action, it is likely he would
have won, but it is not uncommon for people in litigation to give up after a
time. It is not only the legal costs and fees, but the emotional stress that
gets to people.
Clearly in this case had the partners been chosen carefully, none of this
would have happened.
unrelated to real estate, decided to invest in a large residential project,
which would involve all of the engineering and legal work to get the land
approved for subdividing. When finished, the total number of lots would
have a listed FMV of about $9 million. There would be a healthy profit in
there for him when all was done.
His partners consisted of two other men, one who was a
developer/builder and the other a mortgage broker with experience in
real estate projects.
The problem was the developer/builder, who was appointed the
managing partner, and who was the only local partner, was dishonest,
and pocketed over $1 million dollars personally, before the other
partners woke up. It was at this point that the partners made a decision
to bring in an attorney, me.
As our investigation and lawsuit progressed, we learned that the
managing partner had purchased heavy duty equipment with partnership
funds and put title in his personal name. He kept no records. When I
supbpoened the accounting records, he produced a small box of receipts
from McDonalds. I'm not kidding.
His hot shot and expensive attorney, who was extremely arrogant and
self-righteous, claimed his client never did anything and that the other
partners were really at fault for a number of things that he was never
really able to articulate.
The litigation went on for months, and finally the project crashed,
because the temporary financing ended and the lenders foreclosed. The
wealthy partner was unwilling to pour any more money into the project to
save it.
The managing partner got away with over $1 million dollars. This was the
goal of the Seattle attorney representing the managing partner. Had the
wealthy partner put more money into the legal action, it is likely he would
have won, but it is not uncommon for people in litigation to give up after a
time. It is not only the legal costs and fees, but the emotional stress that
gets to people.
Clearly in this case had the partners been chosen carefully, none of this
would have happened.
